Trade, financial openness and dual banking economies: Evidence from GCC Region

Ashraf Khan, M. Kabir Hassan, Andrea Paltrinieri and Salman Bahoo

Journal of Multinational Financial Management, 2021, vol. 62, issue C

Abstract: The recent wave of liberalization in Gulf Cooperation Council (GCC) countries has opened up a debate on the role of Islamic finance in the financial development of an economy. Using a comprehensive dataset of 43 Islamic and 49 conventional banks for the period 2007–2015, in this paper, we investigate the impact of trade and financial openness on financial development in the GCC region. We find that trade and financial openness have a positive effect on the profitability of both banking systems, while the interaction term of openness is negative for the profitability of Islamic banks. Moreover, trade and financial openness affect Islamic banks differently than conventional banks. Notably, we unveil that trade and financial openness decrease the loan volume of Islamic banks but increase their stability.

Keywords: Trade openness; Financial openness; Islamic banks; Z-score; Distance-to-Default (search for similar items in EconPapers)
JEL-codes: F63 G21 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1042444X21000177
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:mulfin:v:62:y:2021:i:c:s1042444x21000177

DOI: 10.1016/j.mulfin.2021.100693

Access Statistics for this article

Journal of Multinational Financial Management is currently edited by I. Mathur and G. G. Booth

More articles in Journal of Multinational Financial Management from Elsevier
Bibliographic data for series maintained by Catherine Liu ().